Builderonline.com – Standard Pacific Strides Into the Black in Q1
By John McManus, May 1, 2012

Standard Pacific released first-quarter earnings post market close last night that beat Wall Street analysts’ posted predictions. After a near brush with death in 2008, and life-support from MatlinPatterson’s real estate funds, Standard Pacific’s strategic, operational, and tactical planning and execution are playing well in what continues to be an adverse market environment in most of its competitive arenas.

The company’s topline reads like one that knows what it’s doing to make strides in a tough-as-nails market, a $24-million swing to the good on year-on-year earnings.

Net income for the first quarter of 2012 was $8.5 million, or $0.02 per diluted share, compared to a net loss of $14.8 million, or $0.04 per diluted share, for the year earlier period. The 2012 first quarter included $4.1 million of income related to the settlement of a property insurance claim.

Strategically, Standard Pacific took a big dose of medicine relatively early on during the crisis as it clawed its way from the brink of oblivion in 2008. It lopped off deadweight, bored beyond its balance sheet into its operating costs, and re-validated every part of its business around a streamlined, simplified core position in the first-time move up and second-move up product and community offerings. This way, it could steer clear of some of the fray around land buying as other, more-entry-level-oriented public home builders crowded the finished lot buying market in the past couple of years.

Still, StanPac’s time-release masterplan called for strong, abundantly clear value in its products, and it went to the drawing board on its floor-plans in the past 24 months, and it looked at land-buying opportunity with assumptions that the market would come back, but more slowly than many other home building enterprises were assuming.

Each part of its strategic plan relied on execution, opportunism, and better execution, which its 2011 and 2012 performance has begun to evidence. Operationally, new ceo and president Scott Stowell has built an iterative, profit-making infrastructure that well withstands a low-transaction marketplace. If the dynamic gains more traction, the strategy will pay in a big way in the next couple of years.